On Monday 23 March, traders placed hundreds of millions of dollars in bets on oil price movements shortly before President Trump announced that the United States would postpone planned strikes against Iranian energy infrastructure. This has sparked concerns about potential insider trading. In an article on the Dutch news outlet NU.nl, Patrick Verwijmeren, Professor of Corporate Finance at Erasmus School of Economics, comments on this significant and unusual trading activity.
Deviant trading patterns
Market data reviewed by major outlets including the BBC and Bloomberg revealed a sharp spike in trading volumes in the minutes leading up to the announcement on Monday. In one instance, contracts covering six million barrels of oil were executed within a two-minute window, far exceeding the typical volume of approximately 700,000 barrels.
Professor Patrick Verwijmeren: ‘The stock markets are designed so that traders can bet on the price development of oil. Normally, you don't see these kinds of trading volumes. This is very suspicious.’
The timing of these trades has raised concerns that some market participants may have acted on advance knowledge of the president’s statement. While the pattern suggests the possibility of insider trading, proving such activity remains notoriously difficult. ‘That doesn't necessarily have to be caused by Trump,’ Verwijmeren adds. ‘It could be anyone who was aware of his message.’
Financial markets reacted instantly to the announcement, with oil prices falling sharply and equities rebounding. Traders who anticipated the move stood to gain substantial profits. Insider trading is a criminal offense, but enforcement is challenging due to the difficulty of proving intent or access to privileged information. ‘Any individual trader can say that he was just taking a gamble,’ Verwijmeren notes.
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Click here for the article on NU.nl (in Dutch). For more questions, please contact Ronald de Groot, Media & Public Relations Officer at Erasmus School of Economics: rdegroot@ese.eur.nl, mobile: +31 653 641 846.
